Sunday, July 31, 2011

If we're going do the coin trick then let's do it right

Although it would not be my first choice, I could go along with the Treasury coin seigniorage dodge if that were the last ditch method selected by the president to avoid default. I would, however, be very disappointed if it wasn't done in an appropriate manner which, for me, would be something like this:

The image on the coin should be the hind end of a bull with a large pile on the ground near its feet. It could be officially known as the "Best Solution", or "BS", coin. On the other side could be an image of W. C. Fields inscribed with one of his wisest sayings: "The time has come to grab the bull by the tail and face the situation".

The actual coin(s) should be kept under extra heavy guard at Fort Knox. However, non-legal but visually perfect replicas should be put on public display at the Smithsonian and, if Congress will allow it, the Capitol Rotunda.

* * *

While I'm at it, I will take this opportunity to explain why the coin seigniorage trick isn't my first choice. It preempts the Federal Reserve's authority, properly assigned to it by Congress, to control the money supply. While the Fed can, as defenders of the coin trick point out, compensate for what the Treasury mints, it shouldn't have to. We do not need two sets of officials with no legal obligation to set a single policy and not answerable to the same branch of government controlling the money supply -- especially if one of them is purposely doing it for the specific purpose of covering government debt.